Social Enterprise Journal

Social enterprise in South Korea

Deok Soon Hwang, Wonbong Jang, Joon-Shik Park, Shinyang Kim,
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SEJ
13,4
362
Received 1 May 2016
Accepted 10 June 2016
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Social Enterprise Journal
Vol. 13 No. 4, 2017
pp. 362-375
© Emerald Publishing Limited
1750-8614
DOI 10.1108/SEJ-09-2017-0047
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1750-8614.htm
Social enterprise in South Korea
Deok Soon Hwang
Korea Labor Institute, Sejong, South Korea
Wonbong Jang
Community Development Center, Korea Foundation for Social Investment,
Seoul, South Korea
Joon-Shik Park
Department of Sociology, Hallym University, Chuncheon, South Korea, and
Shinyang Kim
The Korean Association for Social Economy Studies, Seoul, South Korea
Abstract
Purpose – The purpose of this paper is to investigate the socio-economic background and development of
social enterprises in Korea and identify representative social enterprise models.
Design/methodology/approach – The typology used in this study focuses on the interaction between
civil society, the state and the market in their efforts to solve social problems. As a result, the typology is
mainly related with social goals, although the organizational form is also taken into consideration when
selecting representative social enterprises in each type so as to present a broad array of developmental
histories.
Findings – This paper identified four types of social enterprises: work integration social enterprises; social
service provision social enterprises; regional regeneration social enterprises; and alter-economy social
enterprises. These types are not immutable; another form of social enterprise might emerge to address a new
social issue and lead to a new strand of similar social enterprises.
Originality/value – This study found that the goals of social enterprises in Korea share common
characteristics with those of social enterprises in European countries. Another outstanding feature of Korean
social enterprises is that most social enterprises other than work integration social enterprises also regard
work integration or job creation for the disadvantaged people as one of their important social missions.
Keywords South Korea, Social enterprise, Work integration, Alter-economy, Regional regeneration,
Social service provision
Paper type Research paper
Introduction
Until the early 2000s, the concept of social enterprises was not well-known in South
Korea; awareness of social enterprises first began to spread in the country during the
late 1990s, among social and civic groups as well as among reform-minded intellectuals
who were preoccupied with the issues of poverty and rising unemployment caused by
the unprecedented economic turmoil at that time. The subsequent arrival of the
democratic Kim Dae-jung (1998-2003) and Roh Moo-hyun (2003-2008) administrations
came to place emphasis on the role of social enterprises as part of a concerted policy
effort to combat poverty and unemployment. In 2006, South Korea enacted the Social
Enterprise Promotion Act, thus becoming the first Asian nation to legally stipulate the
conditions and qualifications for social enterprises and to adopt policies for promoting
them.
 The concept and policies regarding social enterprises in Korea were, arguably, deeply Social
influenced by the experiences of European nations (Defourny and Nyssens, 2012). This is enterprise in
evident in the Social Enterprise Promotion Act (SEPA). The second article of the SEPA
states that social enterprises are:
South Korea
[. . .] those companies that have been certified [. . .] that engage in business activities such as the
production and sale of goods and services with the objective of achieving social goals, including
providing vulnerable groups with social services or jobs, thus improving the local residents’ 363
quality of life.
Additionally, for an enterprise to be legally recognized as a social enterprise, the SEPA
requires that it “adopt a decision-making structure where stakeholders (including service
recipients, workers, etc.) are represented” and that “at least two-thirds of any profits
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generated [. . .] be used for the realization of social goals”, thus making the elements of
participatory decision-making and social contribution mandatory requirements.
In the realm of government policy, the term “social enterprise” specifically refers to
strictly defined entities such as government-certified enterprises and provisional social
enterprises. However, outside of this field of governmental policy, enterprises that can be
considered as social enterprises have evolved along varied paths in South Korea, in a broad
range of areas within the “ecology of the social economy”. Defined broadly, social
enterprises include most of the actors in the ecology of the social economy, and the scope of
their activities encompasses a far wider range than those activities recognized by the
government. Besides, some organizations that could be considered as proto-social
enterprises were active in South Korea long before the discourses on social enterprises even
began to emerge. It therefore follows that the idea of South Korean social enterprises should
be understood as a much wider concept than what is officially recognized by the
government. This is the approach taken in this study.
The structure of this paper is as follows. In the second section, we begin by examining
the socio-economic background within which the concepts of social enterprises and social
economy were adopted in South Korea. In the third section, we describe the processes by
which key types of social enterprise were established and spread in South Korea. In doing
this, we shall also review how the civil society has interacted with the government to define
the values and social roles of social enterprises. In the fourth section, we select
representative cases from each type of social enterprises, and examine their characteristics.
Finally, we conclude by briefly summarizing the findings of the study and by discussing
some of its implications.

Socio-economic background and the concept of social economy in South Korea

The South Korean strategy for economic development – a state-led and export-oriented
approach – faced a major crisis during the late 1990s. Due to the accumulation of
overinvestment and current account deficits, society in general was swept into a huge
economic crisis that broke out near the turn of the century. Unemployment skyrocketed as
the economy faltered, which led to a rise in poverty. The enactment of pro-market economic
reforms and a drive for labor market flexibility, which were the terms of the bailout program
by the International Monetary Fund, exacerbated the situation.
While the South Korean economy subsequently experienced a quick recovery and the
unemployment rate declined, the number of people in poverty only shrunk temporarily
before continuing to grow again (Figure 1a). This can be attributed to the higher
flexibility in the labor market, which led to a deterioration in the employment structure
(linked e.g. to a higher proportion of irregular workers) and the proliferation of low-paid
 SEJ
13,4

364

Figure 1.
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Socio-economic
background behind
the introduction of
social enterprise in
South Korea

precarious employment. The passive welfare regime that was in place at the time, which
relied upon derived job creation through the trickle-down effects of economic growth,
was unable to adequately deal with the rise in unemployment, poverty and job insecurity.
As the 1990s progressed, fundamental changes also became apparent in the population
structure, which, along with a strictly enforced family planning program, had contributed to
successful economic development in the past. The fertility rate declined rapidly, dropping
from 1.76 in 1992 to 1.17 in 2002, and has remained among the lowest in the world ever since.
South Korea also became an aging society; the share of the population aged 65 years and
above reached 7.1 per cent in 2000. The rapid drop in the fertility rate, as well as the need for
policy measures to counter it, emerged as topics for national debate. An expansion of the
underdeveloped (compared to developed countries) social services sector was proposed as a
key policy agenda. Figure 1b shows that, as of the early 2000s onward, South Korea has had
a much lower proportion of workers employed in health and social services than other
developed countries.
Meanwhile, with the demise of the trickle-down effects that had accompanied the years of
rapid growth, and the reorganization of all aspects of society along a market-centric notion
of order, various social problems that used to be less visible during the high-growth years
began rising to the surface. The transitions in the structure of the economy have given rise
to new issues and challenges that cannot be adequately addressed by government-led
welfare policies and the existing welfare institutions alone.
Around 2000, civil society initiated a policy agenda to create social jobs; such agenda
consisted in a “translated” version of social enterprises to tackle unemployment and poverty
caused by the economic crises (Hwang, 2000). Then the initiative was quickly
institutionalized and led to the adoption of social enterprise as an instrument of government
policy to create jobs and provide social services. With the institutionalization of policies
supporting social enterprises, social enterprises in turn became more dependent on
government policies. The fact that the support for social enterprises sometimes makes the
social mission instrumental to government policies is a problem that has also been reported
in Europe, where social enterprises developed much earlier (Defourny and Nyssens, 2008).
Civil society movements increasingly began to call for autonomous efforts on the part of
social enterprises, for those enterprises to move beyond being a means of government policy
 delivery and to contribute to the development of the social economy. Social economy was Social
also a new concept at the time in South Korea. Civil society paid attention to the value enterprise in
orientation of the social economy concept in Europe (Defourny, 2001), and expected the
concept to be a possible alternative way of thinking to mitigate the dependency on the
South Korea
government and promote democratic governance of social enterprises (Kim, 2009; Jang,
2013). The concept of social economy made it possible for civil society to consider the
ecology of the social economy as a broader social base of social enterprises development. A
consensus on making the right of freely organizing cooperatives a right for all, with a view 365
to vitalizing the social economy, formed among the political community, and the Framework
Act on Cooperatives was passed in December 2011. Before then, strict regulation prohibited
South Koreans from establishing cooperatives freely, except for the eight types of
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cooperative allowed by special laws.

In addition, a new bill, named as the Framework Act on the Social Economy, was
proposed by both the ruling party and the opposition parties in 2014. The bill is still pending
in the National Assembly as of August 2017, and the new Moon Jae-in administration is
currently preparing for a revised version of the bill. If the Framework Act on the Social
Economy is enacted, South Korea will be the first country in East Asia to officially define the
concept of social economy. The civil society, however, fears that social economy
organizations might follow the same development path as social enterprises and become
dependent on government support.

Identifying social enterprise models in South Korea

Literature review on social enterprise typology
There are only a few studies in the social economy literature that have attempted to put
forward a theoretical typology of social enterprises. The 2001 study by EMES, The
Emergence of Social Enterprise, highlighted the fact that SEs were found mainly in three
fields: work integration, provision of social services and community development. The
identification of these three major fields was not really a typology, properly speaking, but it
came close to it; it was based on the historical context within which social enterprises were
formed in Europe (Borzaga and Defourny, 2001). Later studies that proposed typologies
mostly fall under two major categories, namely, those that focus on the foundations of the
organizations and their developmental histories (Spear et al., 2009) and those focusing on the
social goals (or missions) that the social enterprises intend to address (Gordon, 2013;
Kazmierczak, 2013; Alter, 2014). Meanwhile, Defourny and Kim (2011) have proposed a
typology that focuses on the organizational characteristics of social enterprises, based on
their foundations and developmental history, while also taking into account their social
mission.
Each typology has its strengths and weaknesses. Focusing on the organization’s
foundation and history allows clearer categorization and greater ease in deriving policy
implications for each type of organization. However, such approach also entails the risk of
overlooking the background that gave rise to the social enterprise as a social outcome to
achieve socio-economic goals. Conversely, focusing on the organization’s social goals may
lead to ambiguous categorizations because social enterprises often work towards various
goals at the same time. Meanwhile, a social enterprise’s legal form may also serve as an
important criterion in forming a typology. In particular, early social enterprises in South
Korea were often defined according to their associated policies and formed according to
organizational requirements. Self-sufficiency communities, social job program agencies,
workshops for the disabled and social enterprises were all organizations that were created in
response to policy needs; with the enactment of the Framework Act on Cooperatives in 2012,
 SEJ many social economy organizations started considering transitioning to the form of
13,4 cooperative. However, following this kind of criterion entails a risk of confining the area of
social economy only to organizations that perform government-defined functions.
In view of these points, the typology used in this study focuses on the interaction
between civil society, the state and the market in their efforts to solve social problems,
within the context of the foundation and developmental history of each social enterprise.
366 The typology used here will focus on social goals while taking the organizational form into
consideration when selecting representative social enterprises so as to present a broad array
of developmental histories.

Development of social enterprise models in South Korea

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Before the emergence of social enterprise as a policy agenda in South Korea, there were
already various types of social enterprise-like organizations that had grown and developed
as part of the broader civil society movement. For example, the Wonju region is notable for
its cooperatives, which are part of its regional community movement. The Wonju
cooperative movement, whose roots can be traced back to the establishment of the “Holy
Family Credit Union” in the 1970s, grew into a consumers’ cooperative movement after
issuing the “Hansalim Declaration” and engaging in activities as a consumers’ cooperative.
In the 1990s, production community movements taking the form of workers’ cooperatives
were organized by activists in the urban poor movement, which laid the foundations for the
self-sufficiency production movements that would follow later. The local-food and eco-
friendly-food movement, which began with the Hansalim Co-op, developed into Dure Co-op,
I-coop, Happy Co-op and various other consumers’ cooperative movements, while after the
mid-1990s, medical consumers’ cooperative movements oriented toward alternative medical
services spread nationwide.
Another origin of social enterprises can be found in the public works programs
implemented to face the 1997 financial crisis. In a context characterized by mass
unemployment and a lack of social safety nets, the government implemented large-scale
public works programs as a temporary measure to safeguard livelihoods, bringing civic
groups into the framework by entrusting them with running the programs. In preparation of
the era of “jobless growth” that South Korea would be faced with, civic and social groups
had the vision of developing socially beneficial jobs, referred to as “social jobs”, through
public works. By urging the government to institutionalize these programs, they sought to
secure jobs for people who were excluded from the labor market as well as to provide them
with stable incomes.
Subsequently, social jobs took the route of further institutionalization with the
introduction of the National Basic Livelihood Security (NBLS) system in 2000 (Kim, 2000).
The new guaranteed minimum income system gave cash benefits even to the able-bodied
working age population on the condition that the able-bodied jobless should participate in
self-sufficiency programs. The Kim Dae-jung administration pushed through the legislation
of the NBLS Act under the slogan of “productive welfare”. Some activists from anti-poverty
movements who were involved in self-sufficiency movements considered these reforms as
being conducive to positive welfare, in that they could support the poor to help themselves
through self-sufficiency programs. This process means that South Korea was able to
institutionalize “work integration” social enterprises through the cooperation between civil
society and a democratic government. Therefore, the first type of social enterprise
considered in this study will be the “work integration” social enterprise. It has to be noted
that, during the initial stages of their institutionalization, social enterprises were virtually
 indistinguishable from self-sufficiency programs, and for many observers at the time, all Social
social enterprises were “work integration” social enterprises. enterprise in
However, new forms arose, along with changes in the socio-political environment. Not
only was the agenda broadened beyond work integration to include the creation of jobs in
South Korea
the social service sector; the emergence of new social challenges also prompted the widening
of perceptions regarding the role of social enterprises. These changes took place with the
arrival of the Roh administration in 2003. In terms of welfare policy, cash-based social
security systems had become well-established during the course of the previous
367
administration, and there was growing interest in social services to address the issues of low
fertility and population aging. A pilot program for social jobs was launched by the Ministry
of Labor in the summer of 2003 and an expanded policy for the promotion of social services
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through programs for the creation of jobs in 10 key social areas was implemented in 2004.
Areas whose viabilities had been verified through previous self-sufficiency programs and
the pilot program for social jobs, such as integrated education for disabled children, after-
school classes, local child centers, forest-keeping, etc., were selected (Presidential Committee
on Social Inclusion, 2004). In 2006, the social jobs creation program was expanded to
programs for the creation of social services jobs, thus further strengthening the importance
of these jobs. The Roh administration’s emphasis on the creation of social services jobs led
to the emergence of “social services provision” social enterprises. This is the second type of
social enterprise we shall define for this study.
The Roh administration sought to reorient policy toward developing “continuous and
stable social jobs” into social enterprises (Presidential Committee on Social Inclusion, 2004).
The Social Enterprise Promotion Act was enacted by late 2006 and enforced on July 1, 2007.
Policies regarding social enterprises became fully fledged with the enactment of the law.
Also, serious effort was directed at moving away from the creation of short-term jobs to
more sustainable ones.
Along with the development of social enterprise policy by the central government, local
governments proactively began to participate in social enterprise policies, alongside the
continuing efforts by the civic societies for the regeneration of regional communities and the
emergence of regional issues in the wake of the 2008 global financial crisis. This has led to
the emergence of a new strand of social enterprises, which focused on regional issues.
Region-based cooperative movements predate the emergence of social enterprises, as
evidenced by the movement’s long history in Wonju. Furthermore, during the mid-2000s,
there were numerous efforts for the revitalization of regional communities and revitalization
models coupled with government support. These efforts bore fruit in some regions, where
the proactive support by local governments played an important role. Wonju, Wanju, Buan,
Sungmi Mountain, Hongsung, Bucheon and Seoul are some examples hereof. These can be
understood to represent the appearance of “regional regeneration” social enterprises. This is
the third type of social enterprise identified in this study.
Social enterprises are also linked with various social movements. Social enterprises
became increasingly involved with goals linked to the advancement of various social
objectives, beyond the scope of the traditional goals of work integration, social services
provision and regional regeneration. In this study, we identify movements for the creation of
an alternative society, based on principles of mutual benefit and equality – movements for
local currency, fair trade, fair travel, local food, etc. – which are organized in the form of
social enterprises as “alter-economy” social enterprises. These may also be referred to as
“social innovation” or “new social movement”-type social enterprises. This is the fourth type
of social enterprise defined in this study.
 SEJ While we have adopted a typology made up of four types of social enterprises in South
13,4 Korea for this study, these types are far from immutable. If some other form of social
enterprise emerges to address a new social issue, and if this leads to a new strand of similar
enterprises, that would warrant the creation of a new type of categorization. Moreover, the
fourth type – namely alter-economy social enterprises – is a particularly disparate group,
and it is highly probable that it may split off into different types in the future.
368
Characteristics of social enterprises by type
Work integration social enterprises
The roots of work integration-type social enterprises in South Korea can be traced back to
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the self-sufficiency programs and the ensuing social enterprises created to combat
unemployment and poverty during the Kim Dae-jung administration. Three of the four
work integration social enterprises we investigate in this study (namely, Il-Nanum Social
Co-op, Hamkkeil-Sesang Co. and Sarang-Sonmat - Happy Meal Nowon branch) began as
self-sufficiency initiatives.
Il-Nanum Social Co-op was founded in 2009 as a corporation by the merger of three self-
sufficiency communities that were operating in three main fields of self-sufficiency
programs: cleaning, care services and housing maintenance. It transformed its legal status
into a social cooperative in 2014 after the enactment of the Framework Act on Cooperatives.
Hamkkeil-Sesang Co. is a corporation that led the introduction of eco-friendly cleaning and
maintenance in South Korea. It expanded its business from Siheung to other regions and
established four independent companies in other regions, so it is now a business group of
five companies, and it constitutes one of the success stories of self-support communities.
Sarang-Sonmat provides meals for poor neighbors. It is a partner of the corporate social
responsibility (CSR) project of SK groups, Happy Meal, which provide undernourished
children with packed meals. The fourth case is that of Dongcheon, which is a work
rehabilitation center for disabled people. It was founded by Dongcheon social welfare
foundation in 1993 and is currently famous for producing good-quality headwear. The four
cases are all certified social enterprises.
The characteristics of work integration social enterprises in South Korea can be
summarized as follows. First, the enterprises considered here focus mainly on cleaning, care-
taking, providing meals, sewing and other labor-intensive industries. The workers here are
usually older, unskilled and are frequently affected by disabilities. However, through
extended on-going operation, these enterprises have managed to enhance their management
capacities as well as their human resource management skills.
Second, their main source of revenue comes from the public sector; these enterprises
obtain these resources by performing tasks such as cleaning, maintenance or public meal
provision, as well as by taking part in public procurement or in social service voucher
programs. Public institutions are often required to prioritize contracts with social
enterprises, providing them with a better access to the public sector. Protected markets for
organizations whose goal is to create jobs to integrate those who find it hard to find a job in
the labor market constitute the basis for the survival of these enterprises.
Third, because of their weak capacity, work integration social enterprises are often
unable to implement additional work integration programs such as direct occupational
training, resulting in constrained growth. With the exception of Dongcheon, a work
rehabilitation facility for the disabled, none of the enterprises considered in this study had
regular training programs for their workers.
 Fourth, the enterprises considered here did not provide any additional welfare services Social
other than providing work experiences. This represents a challenge that they will have to enterprise in
address to enhance their performance in terms of work integration.
South Korea
Social services provision social enterprises
Of the 1,776 certified social enterprises operating in South Korea as of July 2017, only 115
specialized in social services. However, a larger number of enterprises (173) operated joint
missions, aiming both to provide social services and to create jobs. Among the enterprises
369
involved in job creation, many are indeed active in the social service field. As of July 2017,
the distribution of all social enterprises by industries showed evidence of numerous
enterprises working in areas related to social services, such as health (15), childcare (13),
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social welfare (108), caretaking and housekeeping (96), culture (210) and education (152)
(source: press release, July 4, 2017, by the Korea Social Enterprise Promotion Agency,
“Current Status of Certified Social Enterprises as of July 2017”). In total, there were thus 594
enterprises operating in the social service sector, thus accounting for 33.4 per cent of all
certified social enterprises.
In many cases, social enterprises that are certified for different activities are also active in
providing social services. Also, because many social enterprises started out as self-
sufficiency programs or social job programs, it is not uncommon for some enterprises to
begin by focusing on job creation before gradually considering the provision of social
services in the process of expanding public social services.
The following are the four organizations that we chose as representatives of the social
services provision social enterprises.
The first case is Ansan Medical Welfare Social Co-op, which was active before the
phenomenon of social enterprises really emerged in South Korea. It belongs to the category
of medical consumers’ cooperatives, one of the archetypal forms of social services provision
enterprises. The second organization is Human Care Co. While it is a corporation, it operates
as a worker-owned firm through an employee stock ownership program. It has been selected
as an exemplary case of a for-profit social enterprise that is run democratically. The third
organization is Dounuri Social Co-op. It began as a self-sufficiency program, later becoming
a self-sufficiency community before transitioning to a social co-op (the first social co-op
registered by the Ministry of Health and Welfare). It provides a good example of how social
services provision enterprises have developed into social co-ops. The fourth organization is
Dasom-I Foundation. It started out as a care-taking, CSR program, in collaboration with
Kyobo Life Insurance Co., and was the first social enterprise to be certified. For this study, it
has been selected as representative of social enterprises operating in collaboration with CSR
initiatives.
The majority of social services provision-type social enterprises operate with the joint
objectives of providing social services and creating (and sustaining) decent jobs. In
particular, enterprises that began as self-sufficiency programs still place emphasis on this
job-creation goal; simply, their focus has shifted from the creation of jobs to the maintenance
of decent jobs. In view of these changes, in the case of maturing certified enterprises, greater
importance should be placed on the sustainability and quality of work rather than
indiscriminately demanding the creation of jobs for disadvantaged workers when
overseeing social enterprises in the future.
Most social enterprises pursue the shared goals of managing their organization
democratically and encouraging the participation of diverse stakeholders. The organizations
presented in this study have approached this in a variety of ways. One important
implication is that, while the legal form of the organization is still important, the way in
 SEJ which an organization is actually run cannot be overlooked. It is important for co-ops to
13,4 practice democratic management and encourage the participation of their constituents.
Meanwhile, it is possible to implement a democratic mode of operation even if the
organization is not legally defined as a co-op. For instance, while Human Care Co. is a legally
a corporation, in reality it runs an employee stockholder program and its decision-making
methods are guided by the “one person, one vote” principle. Despite these accomplishments,
370 more efforts on the part of these organizations are needed for them to operate according to
democratic principles.
Dasom-I, which is legally an incorporated foundation, has a governance structure that
includes the most diverse range of stakeholders. In particular, its operational committee
guarantees the participation of stakeholders (including a worker representative) while
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businesses that have made CSR investments, experts and organization representatives sit in
the board of directors. This reflects Dasom-I’s characteristics as a CSR-oriented social
enterprise. It is representative of a form of governance which places greater emphasis on
participation by stakeholders than on participation by the organization’s members.
Social enterprises, in addition to pursuing social goals, must also be mindful of their
viability as companies. The organizations presented here can be considered exemplary in
terms of their commitment to advancing social goals. However, they still have a long way to
go until they secure true economic self-reliance. This applies to both the Ansan Medical
Welfare Social Co-op and the CSR-based Dasom-I Foundation. Policies must be developed to
ensure the long-term sustainability of social enterprises whose main field of activity is social
services provision. Under the current public tendering process, social enterprises might get
preferential treatment. However, preferential treatment policies by the government do not
guarantee social enterprises to be awarded a contract. Each social enterprise should
demonstrate its social value, while policies should make concrete efforts to link the support
to social enterprises (and co-ops) with the realization of social values.

Regional regeneration social enterprises

Regional regeneration social enterprises are disparate in terms of organizational form or
industry, but they share the trait of being mostly social economy organizations that are
centered on some regional community or smaller city. With the region as their spatial sphere
of activity, these enterprises have been involved in programs within their respective regions
as well as various projects that link their region to outside markets. Regional social
enterprises play an important role because they are able to proactively address diverse
social issues in their local communities, maintain local employment and contribute to
regional integration and vitalization despite often difficult circumstances.
In this study, we present four organizations of this type that have gained prominence
recently. The first case is the Cheonan Housing Welfare Center Co., which began as a self-
sufficiency work group, the “Toad Construction Company”, in 2002. The Center pursued
various programs to address the housing difficulties of low-income families in collaboration
with Cheonan city’s public institutions and businesses. The main engines of the Center’s
growth have been innovative leadership, the dedication and expertise of its workers, and its
ability to mobilize regional resources through mobilizing its vast local networks.
The second organization presented here is the High-One Bakery. It was established in
2013 by the High-One Hope Foundation, an affiliated body of Kangwon Land Co., one of
Kangwon Province’s most prominent public enterprises. It received provisional certification
as a social enterprise in 2014, and has currently grown into an exemplary case of a regional
CSR-oriented organization operated by a public enterprise. Kangwon Land, the parent
company of High-One Bakery, is a public enterprise which operates a casino; the bakery
 aims to re-integrate gambling addicts back into society through providing them with Social
occupational training, rehab and jobs. High-One Bakery also supports the vitalization of the enterprise in
regional economy through its business operations.
The third organization, Chuncheon Urban Farming Center, received provisional
South Korea
certification as a social enterprise in 2011 and is currently operating as a social enterprise of
10 employees. Working in close cooperation with Chuncheon city, it has combined public
works programs with its operations as a social enterprise to provide job creation programs
for approximately 20 workers. It promotes the use of small gardens for urban farming and
371
has also recently begun to manufacture furniture.
The fourth enterprise studied here is the Dongne-Bangne Co-op, created in Chuncheon in
2012. This organization operates in the niche area of local tourism for the vitalization of the
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regional community. It was first established as a social venture business by local youths,
providing guides to tourists. After registering as a provisional social enterprise in 2014, it
reorganized into a co-op and is currently led by local college graduates. Dongne-Bangne’s
social mission is to promote local revitalization through tourism and culture. It has recently
sought to refine the objectives of its mission, with new focus being placed on the vitalization
of inner-city areas.
The key findings of the case study on the regional regeneration social enterprises are as
follows. First, because most regional regeneration social enterprises are latecomers as
compared to other types of social enterprise, they tend to be smaller and are far from being
well-established. They will need to find out firmer foundations upon which to base their
activities.
Second, these enterprises pursue a very diverse range of social goals and activities, which
gives them the potential to create a social economy ecology in their regions. For these
enterprises to take root within their regions, they must form stable cooperative relationships
with local residents, business and local governments, as well as establish links with markets
outside their regions.
Third, although the regional regeneration social enterprises are lacking human, material
and financial resources, they hold great potential for contributing to the integration and
revitalization of regional societies through innovative and creative activities. These
enterprises can also serve as a channel for encouraging the social participation of local
residents. They can also provide young local talents and skilled senior citizens with the
socio-economic opportunities to engage in social activity.

Alter-economy social enterprises

Alter-economy social enterprises have some unique characteristics that set them apart from
other social enterprises. One such important characteristic is that they seek to implement or
discover various different methods of social innovation. While these organizations are
usually led by younger people, recently a more diverse group of people – including retirees,
senior citizens and others – have engaged in activities to address social issues by innovative
means.
Wonju Food Co-op began as an initiative of the Wonju co-op movement that later evolved
into a regional community business rather than a corporation. While its management can be
complex, due to the large number of stakeholders, years of experience in cooperation have
led to a reduction of obstacles to communication and to a stable operation by democratic
principles. This is a strength of Wonju Food Co-op that is not enjoyed by many other co-ops.
Starting with the Ordinance for Eco-friendly School Meal Support and as the center place in
charge of its implementation, the Wonju Food Co-op has evolved into a solver of regional
 SEJ social issues. While its wages are moderate, employment is stable and the working
13,4 conditions are relatively favorable, which has ensured the stability of its workforce.
Farmer’s Market Co-op is a region-based distributor of local foods. As a social economy
organization, it pursues a business model oriented to local food with the personal
involvement of seller-producers. Rather than competing in existing markets, this enterprise
has opted for a new kind of market, which is created jointly by the regional communities to
372 whom the buyers and sellers belong. Because so-called “mutual benefit markets” can
develop through the relationships between regional communities and through the
relationships between buyers and sellers, Farmer’s Market Co-op has made many efforts
regarding involvement in regional communities, including small gatherings, tastings,
promotion and networking. So far, the enterprise continues to rely on public wage support
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due to modest profits, and its shortage of workers has not been resolved. As is the case with
many other social enterprises, these are challenges that Farmer’s Market Co-op must
eventually overcome.
Transition Technology Social Co-op aims to spread the use and awareness of appropriate
technology. It has trained regional experts in appropriate technology through ongoing
classes and has also contributed to establishing foothold organizations for appropriate
technology. It currently plans to draw on these networks and the participants’ expertise in
various fields to produce appropriate technology goods for use by the general public. The
co-op has enabled interested persons from different regions to meet in training sessions and
form informal groups or workshops in the form of co-ops. In this way, the Transition
Technology Social Co-op has sought to play a role as an incubator for startups, as well as to
spread social awareness on appropriate technology. The establishment of the co-op has led
to an expansion of organizations working in the field of energy, which had been previously
under-represented in the social economy. Because appropriate technology combines
technological innovation with a region’s traditional technologies and materials, it must
reflect regional characteristics. Therefore, the Transition Technology Social Co-op has the
opportunity to evolve into a model for region-based social enterprises.
Community Bank Bin-Go operates with the goal of practicing community-based finance,
which radically differs from the market method followed by financial institutions. It aims for
social innovation through establishing an innovative financial community, which
encompasses characteristics such as non-hierarchical management, community-controlled
finance, equality between debtor and creditor, reinvestment in the community and
investment in regional communities for social solidarity, all of which are completely distinct
from the characteristics of market-oriented financial relations. The experiences of those who
were excluded from the usual financial channels as well as the difficulties experienced by
younger generations lie at the heart of these innovative methods of operation. The
experimental attempts by Community Bank Bin-Go have many implications for youths who
are experiencing financial difficulties or who wish to lead different lives. Community Bank
Bin-Go’s experiences correspond to an adventure where both prisoners from Tucker’s well-
known dilemma have chosen to trust each other. It endeavors to develop into a financial
institution capable of realizing social solidarity through the use of the community’s social
capital.
The key findings of the case study on the alter-economy social enterprises are as follows.
First, these initiatives tend to center on new issues, which were originally propounded by
social movements. With the emergence of the social economy as a key issue in South Korea’s
civic societies, new activities that merge social movements with the economy are appearing.
Such areas of activism include appropriate technology (alternative energy development),
alternative finance (local currency), local food, fair trade, community housing, alternative
 regional development, international solidarity and other areas where earlier social Social
enterprises had not been active. Early participants in these areas included civic groups, enterprise in
research institutes, political parties, informal networks and regional communities.
Second, most of these social enterprises appeared after the enactment of the Framework
South Korea
Act on Cooperatives. The alter-economy social enterprises tend to place emphasis on
governance structures (e.g. operation according to democratic principles) as well as on social
goals. Therefore, they perceive the formation of a governance structure different from that of
traditional corporations to be a central part of their agenda. 373
Third, they contemplate structural transitions of the South Korean society. Alter-
economy social enterprises engage in innovative attempts to address various social issues,
including inter-regional inequality (e.g. between urban and rural areas), the collapse of rural
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societies, food safety, climate change, ecological crises due to the depletion of energy
resources, housing crises due to real estate speculation, financial exclusion and social
exclusion due to the collapse of regional communities. The participants in many alter-
economy social enterprises believe that social enterprises have a role to play in achieving
their visions of alternative lives and societies, including the “ecological turn” of societies,
empowering farms and farmers for the self-reliance and self-sufficiency of rural regions and
supporting community housing, non-monetary transactions and the recovery of community
relationships.
Finally, alter-economy social enterprises have the shared goal of expanding the social
economy through the establishment of mutually beneficial communities, practice of
participatory democracy and the promotion of mutual support and cooperation among
actors in the social economy. In this regard, we can expect these enterprises to have the
potential to contribute to broadening the horizons of social enterprises and the social
economy.

Conclusion
Ever since the late 1990s, South Korea has led the trend in East Asia in the fields of social
economy and social enterprises. The country’s efforts in this regard included the enactment
of relevant laws and the active implementation of support policies by the central
government. Some local governments were even more proactive in supporting the
promotion of the social economy, contributing greatly to the vitalization of social
enterprises. Also, existing civic movements and economic organizations drew on their
wealth of experiences and capacities to lead the way in implementing social innovation in
various fields of the social economy. In the private sector, there has been a rise in the support
and participation by corporations willing to pursue CSR policies.
In this study, we have identified four types of social enterprises in South Korea, which we
distinguished on the basis of their major social mission. These types – the “work integration”,
“social services provision”, “regional regeneration” and “alter-economy” types – have shaped
South Korea’s ecology of the social economy both through focusing on their social roles and
through cooperating and competing amongst themselves in various ways. The main findings
and implications of this study can be summarized as follows.
First, work integration social enterprises should move beyond the role of simply creating
jobs and take the initiative in promoting active labor market policies, such as occupational
training, job matching and enhancing the quality of work. Their own efforts, as well as
policy support, will be needed to accomplish this. High-quality employment services
working on the micro level must be developed to meet the diverse needs and desires of the
vulnerable groups employed by these enterprises, to further contribute to work integration.
Work integration social enterprises should ultimately strive for higher-quality jobs through
 SEJ developing adequate employment and training services, rather than indiscriminately
13,4 focusing on job creation.
Second, in the case of social services provision social enterprises, it has been emphasized
that they should find harmony between their social goals and their objectives as companies,
while developing a democratic and transparent governance structure. Meanwhile, to better
secure the sustainability of these social enterprises, various new areas of business must be
374 explored and more support policies must be implemented. Efforts to share the enterprises’
goals of realizing social objectives with the broader public, through encouraging social
support and assistance for these enterprises, have also emerged as a key challenge.
Third, many regional regeneration social enterprises are newly formed and limited in
their scope of activity, which makes them relatively vulnerable. It is therefore important that
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these enterprises secure the organizational resources they lack through actively
participating in inter-regional solidarity and information sharing. To take root in their
respective regions, they must establish links with external markets, based on stable
cooperative relationships with local residents, businesses and local governments. These
enterprises have a high potential for contributing to the integration and revitalization of
regional societies and can also act as channels for encouraging the participation of local
residents. They can also provide a social economy basis for the activity of talented local
youths and skilled older people.
Fourth, alter-economy social enterprises have played a vital role in expanding the
horizons of social enterprises and the social economy in South Korea. They are making new
attempts and creating new markets in various new fields. To continue developing, these
enterprises must undergo a process of systematization for organizational growth while
retaining their innovative capacities.
Finally, operating under democratic principles and stakeholder participation are goals
that are shared by most social enterprises. Most social enterprises dealt with in the study are
(social) co-ops. Some other cases, which operate under the legal form of corporations, such as
Human Care Co. and Hamkkeil-Sesang Co., are considering the option of becoming
cooperatives. While legally recognized forms of organization are important, it is worth
mentioning that these enterprises are trying to operate according to democratic principles.
The actual participation level of members of (social) co-ops and workers of other for-profit
social enterprises in strategic decisions is, however, still not very high in most cases,
because South Korea lacks a strong and extended cooperative tradition, except in a few
regions. But considering the shared value and ongoing efforts of social enterprises, we may
expect the accumulation of experiences in democratic management to bear fruit in the
future.

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Corresponding author
Deok Soon Hwang can be contacted at: deoksoonh@gmail.com

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